BSkyB sees profits, revenues up

Driven by soaring HD subscriber numbers

LONDON -- BSkyB continued to buck the recession that has swamped the rest of the broadcasting sector here, announcing revenue and customer numbers driven by soaring HD subscriber numbers.

Announcing the results for the second quarter, Sky chief executive Jeremy Darroch said that despite a "tough environment" the satcaster had delivered revenues up 10% at £2.9 billion ($4.7 billion) on net profits up 35% at £128 million ($208 million) year-on-year.

Sky added 172,000 net new subscribers over the period to bring the total number of customers to 9.7 million, and added almost half a million HD subscribers over the period, an uplift of 156% year on year, as existing customers traded up to the new package or new subscribers opted for the premium-priced product, which Sky will offer as standard to new subscribers.

Shares were up 2.5% at 568 pence ($9.22) on the news in early trading, as analysts and brokers welcomed the figures.

"It has been another good quarter in what remains a tough environment, with more customers joining Sky and strong demand across our entire product range," said Darroch," who said the company would up its dividend on the back of the performance.

Darroch said the HD performance had been "standout."

Speaking on a conference call, Darroch said Sky would take time to consider its options over the sale of its 17.9% stake in commercial broadcaster ITV, after losing the fourth attempt to overturn the ruling by media regulator Ofcom.

"We are looking at all the options before we make a decision."

SkyB also revealed that 553,000 subscribers had upgraded to PVR boxes and that it added 101,000 new broadband subscribers over the three-month period. Some 18% of subscribers now take triple play television, telephony and broadband services..

Sky remains on track to meet its target of 10 million subscribers at the end of 2010 and increased revenues per subscriber by 11% to £492 ($797) per year over the period.

Operating profit was up 4% year-on-year to £401 million ($651 million) in the six months to the end of December, with adjusted earnings before interest, tax, depreciation and amortization climbing 8% to £567 million ($920 million) with pre-tax profit totaling £358 million ($582 million).

Analysts welcomed the results. "Sky's production developments come at a low incremental cost and should drive both volumes and yields," said Citibank analyst Marc Sugarman, who said that earnings "would be strong."

Daniel Kerven at Bank of America Merrill Lynch said regulatory concerns were "overstated" and that Sky would continue to deliver based on strong operational performances.
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